Where the mess starts
An expense in another currency has three possible figures: what the receipt says, what the bank charges you and what it is worth today. Almost all the confusion comes from mixing them.
You pay 340 pesos for a coffee. Your bank posts it as €17.20 with its fee baked in. Log 340 and your monthly summary stops matching the statement. Log €17.20 and you lose the real cost of a coffee there. And if the rate moves 6 per cent next month, your history becomes incomparable with itself.
The way out is not picking the better figure: it is dropping the idea that everything has to live in one currency.
One currency per account
The rule that sorts nearly everything: currency belongs to the account, not to the expense. Your account here holds euros, your account there holds pesos, and every transaction is logged in the currency of the account it passed through.
With that, each account balance always matches the bank, which is the only thing you need to be able to verify. And a peso purchase paid with your card from here is logged in euros —because it left the euro account— at the amount you were charged, fee included. That is the honest number: what it cost you, not what the sign said.
If you want to keep the local price, put it in the description: “Coffee — 340 MXN”. Text, not a number. It never enters a sum and it breaks nothing.
When to convert and when not to
Do not convert in order to log. A transaction is stored in its account’s currency, at the amount on the statement. Converting at logging time buries an exchange rate inside a number that should be raw.
Convert in order to compare. When you want a combined total or want to compare two months, that is where a common currency and a rate are genuinely needed.
Never convert twice. The classic error: logging the expense already converted and then asking the tool to convert it again for the summary. You get a figure that is neither of the two.
The fees you do not see
Between the market rate and what you are charged there are up to three layers, and only one of them usually shows up as its own line on the statement.
The margin on the exchange rate. Your bank does not give you the rate you see in the news: it adds a margin. You never see it because it sits inside the amount, so a £17.20 charge looks clean when it is carrying a hidden fee. It is the biggest layer and the most invisible.
The foreign transaction fee. A fixed percentage for paying outside your currency. This one usually does appear, sometimes bundled at month end into a single charge you cannot map back to any particular purchase.
The destination ATM fee. When you withdraw cash abroad, the machine itself may charge you on top. It rides in the same transaction, which is why a £200 withdrawal shows up as £207.
How to record it without going mad: the fee baked into the amount cannot be separated —you simply cannot— and there the correct figure is what you were charged. The one that appears as its own line does get logged separately, and if you can give it its own bank fees category, better: after a year that figure tells you whether switching bank pays off, which is exactly the kind of decision categories are for. In Sumant custom categories are a PRO feature; on the free plan you can keep it inside the nearest one and read it by description.
One concrete warning: when a card machine abroad asks whether you want to pay in your home currency or the local one, the answer is almost always the local one. Paying in your own currency hands the conversion to the merchant, and that margin is usually worse than your bank’s.
Why the total misleads you
If you hold €4,000 and 60,000 pesos, the big number any app shows you moves even when you do nothing. A month in which the peso drops 8 per cent shows you a smaller net worth without you having spent a euro more.
That is not a bug in the app: it is what actually happened. The problem is reading it as your spending. Two rules to avoid fooling yourself:
Look at spending by currency, not by total. To know whether you overspent this month, compare pesos with pesos and euros with euros. The exchange rate has nothing to say there.
Save the total for net worth. That is where a single currency makes sense, and where you do want to see the exchange effect: it is part of what you own. How that figure is worked out is in how to calculate your net worth.
And a third, for long horizons: if you are comparing what you save today with what you saved three years ago in a currency that loses value fast, the exchange rate is not the only factor. Inflation does the other half of the work.
Multi-currency accounts
If you use an account that holds several balances at once —euros, sterling and dollars in the same place— the “one currency per account” rule still holds; it is just that the bank sees one account and your records see several.
Create one for each balance you keep open: “Neobank EUR”, “Neobank GBP”. Every transaction goes to the right one and every balance reconciles separately against what you see in the banking app. Merge them into one and you lose exactly what that account gives you.
When you exchange money inside that account —move £500 into euros— conceptually it is neither income nor expense: the money is still yours, it has only changed shape.
This is where the limit sits, and it is worth naming because almost no app solves it fully and Sumant does not either: a transfer requires the same currency at both ends. You can move pounds between two sterling accounts, but not push pounds into a euro account in a single entry. So the exchange gets recorded as two movements: the outgoing one in the sterling account and the incoming one in the euro account.
That muddies the monthly summary —it will claim you spent £500 you did not spend and earned euros nobody paid you— and that is the price of the tool not closing the loop. You soften it by putting both entries in a category of their own, “Currency exchange” or whatever you want to call it, so you can discount them at a glance. And the gap between what left and what arrived, once converted, is the real cost of that exchange: the most honest figure you will ever get about what your bank charges you.
Setting it up in practice
You need two things from whatever tool you use, and it helps to know which third one almost none of them give you: currency per account —not one global currency— and a converted total you can look at separately from the monthly summary. The third, the one usually missing, is moving money between two currencies in a single entry.
In Sumant each account picks its currency from 14 and transactions are stored in their account’s currency. Transfers are recorded as transfers as long as both accounts share a currency; exchanging between different ones is the case left to hand, as explained above. You log transactions yourself or import the CSV or Excel file from each bank, which is particularly handy when you hold accounts in two countries and no single app connects to both.
If you are comparing tools for this reason, Wallet by BudgetBakers leans hardest on multi-currency; the differences are in Wallet alternatives.
And if you take one idea away from all this, make it this one: the goal is not a tidy number on a screen, it is each balance reconciling with its bank. A converted total is an estimate; an account balance is a fact. Get the facts recorded properly and the estimate works itself out.